Eminem Focuses His Ire On His Paltry Digital Royalties

F.B.T. Productions, the publishing company that handles the rights to cranky MC Eminem’s back catalog, is going to court today, where it’ll take on Universal Music Group in a battle over digital royalties. The jury in the trial is being charged with figuring out whether a download deal is a licensing agreement or a distribution agreement—and, by extension, whether or not Universal has to fork over more money to Eminem, as well as other bars in its stable.

The key question for the court, Cooper said, is whether the jury will determine that the use of an artist’s music in a download deal is a licensing agreement or a distribution deal.

The difference in monetary gain for artists is potentially huge. Under traditional licensing agreements, which cover records and CDs, the artist splits royalties 50-50,with the record company. Extended to include digital downloads, that could mean as much as 35 cents for the artist for every iTunes purchase. Under a distribution arrangement, the artist might see less than 20 cents. …

In court papers, Aftermath disputes allegations that the company withheld royalties or that the company is misinterpreting contract language that F.T.B. says equates digital downloads to the sale of music in other forms.

“If you give the music to a third party without cost to you, like manufacturing or packaging, that’s the same as a licensing agreement,” said a person involved on the plaintiff’s team who asked not to be identified. “They are characterizing it as something else.”

The plaintiffs claim that UMG has maintained “licensing agreements” with third-party distributors for digital downloads since 2001, including as many as 80 for so-called Mastertones, which play when an incoming call reaches a cellphone. They further say that in no contract revisions with UMG was clarifying language inserted to accommodate the changing technological landscape.

In court papers, they cite various instances when executives from UMG and digital distribution partners used the words “licensed” and “licensing” in discussing their financial relationships.

One document says Steve Jobs “discussed his company’s relationship with UMG as that of a ‘license’ in an essay titled, ‘Thoughts on Music,’ dated February 6, 2007.” It went on to say, “He explained Apple’s need to ‘license rights to distribute music from others,’ mentioning Universal and the other large record companies.”

Universal is saying that the plaintiffs are misconstruing the contracts, and that a 2004 modification to the deal between FBT and UMG “expressly recognizes that downloads are sold, not licensed, for royalty purposes (indeed, that selling them is a ‘method of sale.’).” Developing…

Wrap Exclusive: Eminem Sues Universal for Royalties on Downloading [The Wrap]